Fin24

Labour turmoil hitting SA growth

2012-10-14 16:01

Johannesburg - Two months of crippling labour turmoil are likely to force South Africa to look again at its economic growth forecasts, the Reserve Bank's deputy governor said on Sunday.

Wildcat strikes that started in the platinum mines have left more than 50 dead and spilled to other industries, undermining investor confidence and tarnishing President Jacob Zuma’s government.

Violent clashes between police and protesters continued over the weekend and more than 70 miners were arrested.

“Growth forecasts will most likely need to be revisited,” Reserve Bank Deputy Governor Daniel Mminele said in a speech to a JP Morgan investor seminar in Tokyo that was posted on the Sarb’s website.

The Reserve Bank’s latest economic growth forecasts were for an average 2.6% this year and 3.4% next - still far short of the rate South Africa reckons it needs to cut unemployment accounting for a quarter of the labour force.

It was not immediately clear whether those growth forecasts, given in September, were the ones Mminele was referring to.

In another knock for South Africa, Standard and Poor’s cut its credit rating on Friday, citing the strikes and social tensions. Moody’s downgraded South Africa in September.

Reacting to the downgrades, Mminele said they were disappointing, but some of the criticism was valid.        

Impact of wages

Financial analysts are not only worried by the turmoil, but also by the possible impact on inflation of wage rises that some of the strikers have won - up to 22% in the case of Lonmin [SJE:LON] miners.

The Sarb had yet to see evidence that hefty wage increases were becoming the norm, but would have to keep a close eye on them in case they had a spillover in pushing up prices or expectations of price rises, Mminele said.

Clashes continued over the weekend, nearly two months after police shot dead 34 strikers at Lonmin’s Marikana mine on August 16, the bloodiest security incident post apartheid.

Police broke up a sit-in by nearly 600 miners from a Gold Fields [JSE:GFI] mine demanding the release of colleagues at a police station, about 45km west of Johannesburg. Seventy-two miners were arrested.

Near Rustenburg, in the “platinum belt” about 120km northwest of Johannesburg, police fired tear gas and rubber bullets after a march on an Anglo Platinum [JSE:AMS] (Amplats) mine turned violent. Four protesters were arrested.

President Zuma’s government has been criticised for allowing the strikes to spread, as well as failure to address yawning class divisions and grinding poverty that still characterise South Africa 18 years after the end of apartheid.

Zuma faces a significant threat from members of the ruling African National Congress who are lobbying for his removal as head of the party at a scheduled leadership election in December. He held a “social dialogue meeting” on Friday with union and business leaders and some cabinet ministers to discuss the economy.

But the meeting appeared to deliver little new: Zuma’s office released a statement pushing the need for improved industrial relations and condemning the violent strikes.

Separately, mines minister Susan Shabangu was quoted by local media on the need for the ANC to drop talk of nationalisation. Some members of the party have lobbied for increased state intervention in the industry.

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Comments
  • Gatvol Griet - 2012-10-14 16:40

    Goodness, no!! In a Banana Republic leaders can always carry on as they please and nothing ever goes wrong! Wealth keeps raining down from the skies... Or so they hope!

  • J.Stephen.Whiteley - 2012-10-14 16:48

    The purpose of growth forecasts is to compare the value of present and instant production with the amount of money in circulation. A reduction in borrowing and a rise in saving is now called for, that is, a rise in interest rates.

  • Prince Bird - 2012-10-14 17:08

    They recalled Mbeki while there was no need to do so,why can't they recall this shower man? It seems as they're all scared of him except Malema.

      john.morreira.9 - 2012-10-14 17:52

      Mr Malema was instrumental,in getting Mr Mbeki recalled and getting Mr Zuma to become President.Ironic,don't you think?

  • lacrimose.wolf - 2012-10-14 17:33

    Quelle surprise. Had anyone in The Alliance actually done something 2 months ago we'd not be in this situation now. Mind you, had anyone in The Alliance done anything they were supposed toin the last 18 years, there'd be no riots or violent protests.

  • nhlanhla.mahlangu.7393 - 2012-10-14 17:39

    the strike wont stop until these worker's n thugs get that R12 500p/m which s lot for management, so now R150mil for nkandla development shuld b manipulated to their salaries! while the mining companies contributes abt 12%, JZ trust me it'll work

  • chris.vandermerwe.560 - 2012-10-14 18:08

    Maybe high time they look at "hidden" taxes.. plastic bags, property tax, VAT, private security and hospital plans, garden services, free housing, school funds, petrol price hijkes, electicity, food prices and the presidents salary.. huge gap + 204 mil house improvements,etc. The Government should budget like everyone else, if you can't afford let it go!!! No wiskey for beer money!!

  • william.hall.12979 - 2012-10-14 23:00

    Already looking for excuses? oh no, its the strikes... not the lack of infrastructure, electricity, skills or productivity? We would not have been able to grow much past 2008 levels for 6 years anyway until more power stations come on stream! Lucky for guvment the fin crisis hit! Sad that strikes can be blamed for a lack of growth... all the mines were sitting on stockpiles due to world demand problems, so this should hardly impact growth permanently... In fact increasing the spending power of the workers should actually stimulate domestic spending growth (also inflation... but who cares about that). Am i the only one thinking something smells funny here?

  • jason.rom.9 - 2012-10-15 08:32

    bla bla bla bla bla

  • freddy.vanwijk - 2012-10-15 16:37

    I can only see a dramatic price hike in petrol & diesel coming out of this mess. All festive holiday plans are cancelled, tourism will suffer and go into a recession. Yet strikers will still think of their "beloved xmas bonuses". Well Father Christmas will not be comming out to this country of ours because he is in recession himself due to strikes. So there you are! A rise in interest rates could lead the economy into a "crash" again as it has done so many times before over a period of time and us older folk know why.

  • KennySven - 2012-11-12 16:10

    THE ROT STARTS AT THE TOP,THIS IS A PROVEN FACT. ZIMBABWE USED TO BE THE THE BREAD BASKET OF AFRICA,AND NOW?DESTROYED,WE ARE GOING THE SAME WAY FAST. YOU CAN SAY WHAT YOU LIKE,SHOWERHEAD IS NOT QUALIFIED TO BE A LEADER.HE CAN'T DO OR SAY ANYTHING PRESENTLY AS HIS SPEECH WRITER IS OUT OF TOWN AND IS FAR TO BUSY WITH HIS RENOVATIONS AND HIGHWAY. MALAMA IS 100% RIGHT,HE MUST GO. MADAME ZILLE WOULD BE A FAR BETTER LEADER,A PROPER PERSON,EDUCATED,WELL RESPECTED,HONEST,DOES NOT HAVE ANY SHAIK'S AS BUSINESS PARTNERS,DOES NOT HAVE AFFAIRS WITH HER NEPHEWS AND MOST IMPORTANTLY HAS FAR BIGGER BALLS. IT'S WHAT THE COUNTRY NEEDS,AND SOON BEFORE IT'S TO LATE AND NOTHING IS LEFT JUST LIKE ZIMBABWE.

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